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In what could mean a major setback for Ranbaxy Laboratories’ ongoing consent decree with the US regulatory authorities, the company has voluntarily recalled some batches of its generic version of cholesterol-lowering drug Lipitor from the US market.

“The recall is being conducted at the retail level for such select batches that may contain a foreign substance (small glass particles less than 1 mm in size),” Ranbaxy said on the website of its US company (Ranbaxy Pharmaceuticals Inc).

When contacted, the company said it was a temporary disruption in the US and it had already initiated an investigation, which was expected to be over in two weeks, after which it was likely to resume supplies. “The investigation with regard to the issue is expected to be completed within two weeks and thereafter the company expects to resume supplies,” it also said in a statement to the Bombay Stock Exchange (BSE).

Lipitor generic contributes around 20 per cent to Ranbaxy's total US base business

Shares of Ranbaxy Laboratories slipped through the day to end at Rs 497.90 on BSE, down 2.89 per cent from yesterday’s close.

Ranbaxy manufactures Lipitor generic or atorvastatin calcium from two of its facilities — one in the US and another in Mohali. The company refused to disclose the manufacturing location of the recalled batches and did not respond to a detailed questionnaire sent by Business Standard.

According to the company’s US website, Ranbaxy is conducting a voluntary recall for atorvastatin calcium tablets of 10mg, 20mg and 40mg dosage strengths, packaged in 90- and 500-count bottles. The recall does not affect or relate to the 80mg strength, which the company also manufactures.

According to analyst estimates, the three variants of the drug — 10 mg, 20 mg and 40 mg — contribute around 85 per cent of the company’s total revenues from atorvastatin. After its 180-day exclusive marketing period for the generic drug ended in May this year, Ranbaxy’s revenues from atorvastatin were estimated at $60-65 million, analysts said. The drug, which contributed around $600 million during the exclusivity period, is still a major revenue churner for the company.

At present, Lipitor generic contributes around 20 per cent of the total base revenues of the drug maker from the US, another analyst said.

According to analysts, the latest development is not only significant from the financial point of view, but also because it may have a huge negative impact on the company’s ongoing negotiations with the US Food and Drugs Administration (USFDA) regarding violations found in 2008.

The company, owned by Japan’s Daiichi Sankyo, has had a troubled history in the US. Ranbaxy’s three key Indian facilities — at Paonta Sahib and Batamandi (both in Himachal Pradesh) and Dewas — have been on the US regulator’s import alert since 2008. FDA had banned 30 generic drugs produced by Ranbaxy at these three units, citing gross violation of approved manufacturing norms. The regulator had also denied marketing approval to new products from these units after it found violations.

However, after negotiating for over two years, Ranbaxy signed a consent decree with the American authorities in December last year, putting an end to the long-running regulatory tussle. Though the settlement allowed the company to resume drug imports from India, it prevented Ranbaxy from manufacturing drugs at the Paonta Sahib, Batamandi, Dewas and Gloversville facilities for introduction to the US market and for the President’s Emergency Plan for AIDS Relief programme until drugs could be produced at such facilities in compliance with the US manufacturing quality standards.

“The category or class of recall is not known yet. If it is a case of contamination, it could be serious, mainly in the context of the ongoing settlement with USFDA,” one of the analysts said.

The development may also impact the pending approval of Ranbaxy’s generic version of hypertension drug Diovan, for which Ranbaxy is expected to have a 180-day exclusive marketing period. Approval for the drug is already facing delay and the latest development may increase troubles for the company.

“This recall (of atorvastatin) is being conducted with the full knowledge of USFDA,” the company said on its US website.